Geron Corporation's (NASDAQ:GERN) Profit Outlook

With the business potentially at an important milestone, we thought we'd take a closer look at Geron Corporation's (NASDAQ:GERN) future prospects. Geron Corporation, a commercial-stage biopharmaceutical company, focuses on the development of therapeutics products for oncology. The US$1.1b market-cap company announced a latest loss of US$175m on 31 December 2024 for its most recent financial year result. Many investors are wondering about the rate at which Geron will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Geron is bordering on breakeven, according to the 8 American Biotechs analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$20m in 2026. The company is therefore projected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 63%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Geron's upcoming projects, however, keep in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

See our latest analysis for Geron

One thing we would like to bring into light with Geron is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Geron's case is 42%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Geron which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Geron, take a look at Geron's company page on Simply Wall St. We've also put together a list of key factors you should further research:

1. Valuation: What is Geron worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Geron is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Geron’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.